US Offshore Wind Prepares For Launch

Positioned between the affluent of Martha’s Vineyard to the east and the well-heeled of The Hamptons to the west, Block Island has always been more of a casual paradise, a place for blue-collar workers to make summertime memories and sea-loving residents to enjoy the solitude of the other three seasons.

The island mentality isn’t cutting edge, preferring instead the ideal of self-reliance. The island, though, has long had a problem. Gone are the days when timber and native peat powered the homes of the earliest settlers. For generations, the island has had to look to the mainland to help power its placid lifestyle. It’s become a central issue for isolated residents but, until recently, those on the mainland never fully appreciated the laborious path needed to bring electricity to the island. On schedule, truckloads of diesel fuel drive into the belly of a passenger ferry where they are shipped 20 km to port. From there, the trucks are unloaded and head off to make their deliveries. Then, it’s back to the mainland – once again on the ferry.

With electricity rates as high as 60 US cents/kWh – about five or six times higher than the national average – Block Island finds itself vulnerable to the volatile nature of oil prices, especially during summer when peak load on the island quadruples to about 4 MW.

While Martha’s Vineyard and Cape Wind have garnered the most headlines – and the most vocal protests – for an ambitious 468 MW wind farm that has federal approval in the heart of Nantucket Sound, Block Island has moved ahead relatively quickly, at least as far as US offshore wind projects go.

A recent Rhode Island Supreme Court ruling upheld a signed power purchase agreement (PPA) with National Grid. The developer, Deepwater Wind, is hoping for final permits to clear as soon as the end of this year or early in 2013. If that final hurdle is cleared, blades could be spinning 5 km off Block Island’s south shore by 2014. And that would be a first for the American offshore wind market, which has stacks of reports detailing its vast potential but zero installations that will help the market draw international players to the region. Cape Wind has led this battle for years, and it is still in position to become the first large-scale project in coastal waters. But it’s been a long haul of objections, lawsuits, federal rulings and negotiations for PPAs. The project has agreements for three-quarters of the power it would produce, and is working towards securing the finance needed to begin construction in 2013. On that schedule, Cape Wind would potentially start producing power by 2015.

By then, the US offshore market would be even farther behind Europe, which is quickly developing into a manufacturing – and power-generating – force. By the end of 2011, Europe already had 1371 turbines in its waters totalling more than 3813 MW, more than 2000 of which were in the UK. There have even been recent milestones reached with two full-scale grid-connected floating turbines.

The First One In

All new industries have a first, and it’s been a race of sorts to get ‘wet steel’. The Block Island project is small by most standards, though it’s quite large measured by Block Island’s power needs. The project, which started as an eight-turbine, 28.8 MW wind farm in 2008, has morphed into a five-turbine, 30 MW project that will utilise 6 MW Siemens offshore wind turbines that have just recently reached the market. Transmission lines will feed from the project site to the island, which will then be connected to the mainland grid. The project itself will represent about 1% of the state’s power capacity. So even though the prices determined by the PPA – 24.4 cents per kWh in its first year with slight increases each year after that – are far higher than those coming from natural gas and nuclear resources, the average customer can expect to see monthly bills go up between only US$1 and $3.

But to measure the importance of the first offshore wind project by size or PPA would miss the entirety of what the burgeoning offshore wind industry is working to achieve. The Block Island project is sizable and, yes, it will certainly be visible to those on the island’s south shore. But in governors’ offices from Maine to Virginia, the real goal is to create a new and vibrant industry, one that would be based on the East Coast and one that would build manufacturing and fuel innovation. Like the shipyards and ports that helped make the East Coast an economic hub, an offshore wind industry based on maritime tradition hopes to cash in on the promise of clean energy.

Europe is about a decade ahead. It’s taken slow, methodical steps as it builds bigger turbines in deeper waters. The American wind industry hopes to use European knowledge as a springboard to massive-scale projects that push beyond existing technology.

An avian radar system near Block Island’s Southeast Lighthouse monitors bird flights at a prospective turbine site (Source: Deepwater Wind)

This is, in some respects, already being done with Deepwater’s Block Island project, which will go in 30 metres of water, a relatively deep dive even by European standards. The real advantages, though, will come when large-scale projects are achieved. That’s the goal of governors across the Atlantic seaboard. That’s the goal of the federal departments that are trying to clear the way for such projects. That’s certainly the goal for Deepwater Wind, which is vying for a federal lease 40 km off the Rhode Island and Massachusetts shore for a project that could use 200 turbines and surpass 1 GW in scale. Such a project would be several times larger than even the biggest installed wind farm in Europe to date.

‘It’s frustrating [seeing what Europe is accomplishing], but there’s also an opportunity because of it,’ said Jeffrey Grybowski, of Deepwater Wind. ‘Because of the investment they’ve made, a huge supply chain has been built and innovation has been set up. The US can now proceed with large-scale projects because of the legwork that was done in Europe. Now, even a moderate pace of building will attract infrastructure and manufacturing.’

Wind Areas up for Grabs

Deepwater Wind is among a handful of companies hoping to secure a federal lease in the area south of New England, which is prized for the strong consistent winds that made the waters the longtime home of the international America’s Cup sailing race. The area is just one of many swathes of open water that have been considered, or are under consideration, potential wind farm sites. These federal lease sites already include large areas off the coasts of New Jersey, Delaware, Maryland and Virginia. The Department of the Interior’s (DOI) self-dubbed ‘Smart from the Start’ initiative aims to streamline the siting and permitting process by creating wind energy areas to help serve some of the major population centres of the East Coast.

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From the US federal government’s point of view, the potential is too great to ignore. The initiative hopes to calm the bureaucratic waters in pursuit of an end goal of 10 GW of offshore wind by 2020 and 54 GW by 2030. Of obvious concern for those in and out of the industry is the cost of electricity. The DOI’s goal includes this as a fundamental part of its modelling, and if its goals are reached, offshore wind prices would be more than competitive enough to spark further investment. It is looking to get consumer costs down to 10 cents/kWh by 2020 and 7 cents/kWh by 2030.

Already, one commercial wind lease has been granted, going to NRG Bluewater for a 450 MW wind farm in Delaware. Leasing rights approval allowed the project to move ahead, but it stalled in December over what parent company CEO David Crane termed ‘the difficult and unfortunate realities of the current market’. The company maintains the rights to the federal lease, and it says it may one day build the Mid-Atlantic Wind Park, but the sudden retreat highlights the challenging financial, logistical and community pressures that go into building a large-scale project in uncharted waters.

Making Waves

However, other recent developments indicate that the industry may yet be able to move ahead in Atlantic waters. In two states the industry is working to harness perhaps the most important ingredient in successful development – political weight. A new report by the Environment Maryland Research & Policy Center notes that an offshore wind industry would be able to fill two-thirds of the state’s energy needs using current technology. Aside from the benefits of new energy generation, the report concludes that turning the state into an industry hub would benefit the Eastern Shore region with manufacturing jobs, and would give an economic boost to Central Maryland if steel production were to turn toward offshore wind.

Such potential economic impact has spurred a renewed interest in crafting legislation that would speed up development. Offshore wind supporters are rallying behind a state bill that would add a monthly surcharge to each customer, helping to boost efforts to develop a major project in the federally leased area. Support has been so vocal that on one evening proponents formed a circle around the state house with chants of ‘All we are saying is give wind a chance.’

In Virginia, the political pressure has been perhaps a bit less obvious, but it has become a central issue nonetheless. Republican governor Bob McDonnell recently hailed a single Gamesa 5 MW prototype slated to go in as early as 2013 as the type of test project that could propel the industry to the head of his state’s list of potential job creators. Jubilation was short-lived, though, as Gamesa announced in early May that it was backing off the project because the market is not yet sufficiently developed.

From a utility perspective, it’s a monumental challenge that has tremendous rewards, but also one that deserves its due diligence. For Virginia Dominion Power, the state’s largest utility, offshore wind is an alluring prospect. While it’s not listed as part of its official long-term goals – mostly because costs remain too high – it’s investing time and money to determine if the technology can achieve the pricing needed to move forward.

The utility is a major political player in the state and it has engaged in discussions on everything from policy and permitting, to industry concerns. Dominion Virginia Power has so far funded two studies to better understand the costs, what the demands are, how the power gets to the grid and how the transmission would need to be designed.

It is also looking to potentially bring the federal wind area under its domain. Dominion Virginia Power recently became one of eight companies to show interest in obtaining the lease rights to all 45,700 ha 37 km off the coast. That hasn’t stopped some critics, namely the state’s Sierra Club, from contending that the utility giant is working to lock up the land so that no other developers can access it. It’s an accusation that doesn’t sit well in Dominion Virginia Power’s Richmond offices.

The utility has faced outside pressure because of its limited renewables portfolio. It has 410 MW of renewable capacity, mostly in hydropower and biomass. Still, the company says offshore wind presents something that the other forms of renewable energy do not: the ability to truly scale up to achieve the low costs it’s looking for. This potentially pairs well with its own non-binding target of getting 15% of its power from renewable sources by 2025. ‘For the wind energy areas identified, it’s a great resource we have,’ said Mary Doswell, a senior vice president for alternative energy at Dominion Virginia Power. ‘We have shallow water going out for 30 miles [48 km]. We have category five winds. We have large shipbuilding facilities. Offshore wind is the one renewable that gives us the capability of scale.’

But the bottom line for the utility is, well, the bottom line. And right now, that bottom line would be far more expensive than that of any other source in a state where the average electricity rate is $0.11/kWh. The company recently received a Department of Energy grant it says will help it work toward reducing costs by 25%. Even such a feat won’t get the technology to where it’s the best available option, but it will give the utility a better understanding of which levers to pull when trying to bring down end prices. There’s a natural downward price momentum, says Doswell, that further increases the chances that 10 cents/kWh by 2020 is achievable.

It’s those measures that have been taken that, Doswell says, proves to any critics that the company has every intention of exploring offshore wind. ‘We want to see the costs come down,’ said Doswell. ‘We’re trying to find a way to make this work.’

Farther Afield

The deeper south you go, the farther behind each state is in becoming the industry’s leading job and power generator. Some efforts have been made in North Carolina, which last year created a state task force to study how the industry would affect jobs, power rates, tourism and the economy. But a state like South Carolina which, like North Carolina and Virginia, boasts ideal offshore wind conditions, has done little to keep up with the states in the northeast.

The area from Virginia to South Carolina is certainly more susceptible to the hurricanes that often batter the coastal regions. In that respect, New England is better suited for large wind farms. But that Southern Atlantic region has the wide, shallow waters that push installations farther from shore where the wind is the most consistent and the strongest. Yet it is still able to do so with existing technology that anchors each turbine to the ocean floor.

Those ideal offshore conditions are generally 12 nautical miles offshore and in areas with water less than 9 metres deep. According to the National Renewable Energy Laboratory, North and South Carolina account for more than half of that resource. When you add the two states with Virginia and Georgia, it tallies up to more than 80%.

Geographic differences aside, the opportunity to take the lead in a market that’s yet to develop is perhaps why some key stakeholders along the Eastern seaboard are eager to see their state emerge as the hub of a new US industry.

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Renewable Energy World's content team members help deliver the most comprehensive news coverage of the renewable energy industries. Based in the U.S., the UK, and South Africa, the team is comprised of editors from Clarion Energy's myriad of publications that cover the global energy industry.

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